Monday, October 27, 2008

Step One

How did we get started?

We looked at our bank statement and realized we spent almost $1000.00 eating out. A thousand dollars for us two and, at the time, a 15 month old baby, and we spent $500.00 on groceries, which we throw most of it way because we didn't eat at home. We started to cook more at home and put as much as we could in savings.

Initially, our plan was to take 3 months to save. We figured to save 1000.00 in 3 months we needed to put away, 333.33 a month. That number looked huge to us, so we broke it down per paycheck and we decided to save $85.00 a check. We got paid 4 times a month between the both of us. As soon as the direct deposit hit, we transferred 85.00 to savings. What helped us save faster was not eating out and I got a bonus check from work and we put 200.00 away from that.

We have not moved on to Baby Step Two, because we are expecting a baby. Felicia and I decided that we should probably save enough to help cover expenses because again she would not be paid during maternity leave. We increased our paycheck saving to 100.00 and at the end of one month, we had 400.00 left over and moved 200.00 over to savings. I was wondering if we were doing the right thing by delaying Step 2, but Dave Ramsey told a caller the other day that he should put off Step 2 and throw anything extra into savings until momma and the baby were home safely. When we decided to do it that way, it seemed to be common sense and I was glad to hear it made sense to Dave. I am not going to lie and say it was easy. Our plan was start going to the the grocery store on Sundays for our weekly shopping. We missed one Sunday and for that whole week we were eating out and wasting money. We paid a stupid tax on that one. One lazy Sunday caused us to go over budget by 200.00. Once we started eating out, it was let's buy this and that. None of it were huge purchases but none the less we have nothing to show for what we spent.

Our goal is to spend 100.00 week on groceries and the first few times it worked out to be 150.00 a week, but this last time, we spend 96.35 and later today we have to buy milk for the baby. That may put us over a 100.00, but the groceries are lasting 2 weeks this time. I am not sure if we can do that every week, but it would be nice to be able to.

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My wife and I are expecting a baby girl in February. We are very excited and cannot wait to meet her and for her to meet her older brother. Naturally after we celebrated the good news, we started to think about how to prepare for this addition to our family. We looked around us and our home started to look even smaller than what it really is. Where are we going to put this stuff? How are going to afford all the new stuff? My wife and I would talk about our excitement and our worries. Of course, money is a concern. If we had the money, we can just go out and buy everything we need and buy a bigger house before the baby is born. Right now, we simply cannot afford it and that it is frustrating.

The stress of it all was started to get me, so much that I started losing sleep over it. We don't have anything in savings, we have too much month at the end of the money. My energy level was starting to get sluggish, I started to show up late for work more and more. I started to question my job security, because I work in the financial industry.

One day I got off of work early and on my home, I saw a billboard that said "Act Your Wage," and it had a picture of bald guy named Dave Ramsey. I laughed and said who acts their wage. If I acted my wage, I would have nothing. I went on like usual, stressing about money and how are we going to afford the new baby. On my home from work for a week, I kept passing the billboard and for some strange reason I kept noticing yet. Finally, I was in the car when the Dave Ramsey radio program was on the air and switched from 1310 The Ticket to 570 KLIF. There was a guy with a Southern accent talking about how he went broke for stupid things he did and how he rebuilt his wealth. He was giving people advice on how to do the same. One caller caught my attention, she called looking for advice from Dave. She was divorced with kids and fell behind in her bills because her ex-husband lost his job and could not pay child support. Dave asked her about her income and debt and then he told her that she needed to sale the house because it was too much for her. This is the part that got me. He told her that she did not need to rely on another person who is obviously unreliable to help pay her bills. She needed to take responsibility and take care of herself and her family.

I am not exactly in that lady's situation but by stressing and losing sleep over my financial status, I was in essence not acting on my responsibility. I was not helping to take care of my family, I was not setting a good example for my son or my soon to be born daughter. When I get in trouble, I rely on other people to help me. When my son was born, we relied on my dad to help us out with the bills until my wife went back to work. After listening to his show, I looked him up online. I read about his seven baby steps and testimonials about people who made less or the same amount of money as me and had more debt than me becoming debt free in no time. I figured I am not getting anywhere by throwing my hands in the air and wondering what am I going to do, so let me give this guy a try.

I went to Barnes and Noble to buy his book The Total Money Makeover, but they did not have it in stock. I ended buying another book of his, Financial Peace University Workbook. The book talks about getting on a budget and Dave's lays out his 7 Baby Steps to financial freedom. I started listening to his show as much as I could, I would schedule my lunch break around the show so that I could eat and listen to an hour in the car. After listening to him and his listeners and reading his book, my wife and I decided to give it a try.

We finished Step One pretty quickly, which is to save $1000 to start an emergency fund. In fact, we started on July 2nd and finished August 15th. I know it is not much of a cushion, but just knowing we have a $1000.00 in the bank allowed to sleep better at night.

I have been telling my mom, sisters, brother, and cousin about finishing Step One and how good it felt and also a little about Dave Ramsey book. My mom told me she bought one of Dave's book, but was not sure if it was the right one. She bought Total Money Makeover and then a few days later I bought it. A couple of days after that, my sisters bought the book as well, and when I was talking to my cousin, he told me that he bought the book. Felicia and I have company on this journey to take control of our money. Felicia has not read the book or listen to Dave's show, but she probably does not have to since I am always telling her about what I read or what I heard. She is sick of hearing Dave's name. She has said this week she is going to read the book too.